As the European Union imposes steep tariffs on Chinese-made electric vehicles, Chinese automakers are accelerating their production in Europe this year, though their approach has shifted significantly. Rather than building their own factories, many companies are now choosing to partner with European firms and utilize existing European manufacturing facilities.
The EU’s anti-subsidy tariffs on Chinese electric vehicle imports last year substantially increased costs for Chinese EVs. Given the high expenses and regulatory risks of exporting to Europe, establishing local production lines has become essential for Chinese new energy vehicle makers. Recent announcements reveal this partnership trend: Leapmotor is working with its investor and joint venture partner Stellantis to produce vehicles at a Spanish factory starting in 2026, while Xpeng has partnered with European automotive giant Magna to manufacture its G6 and G9 models at an Austrian facility this year. Reports suggest GAC Group is also exploring contract manufacturing with Magna.
With localized production support, Xpeng will simultaneously enter five European markets, including Austria in October and Switzerland through collaboration with Hedin Group, one of Europe’s largest automotive dealers. Hedin has partnered with BYD since 2022 for sales in Sweden and Germany, and last August sold its German subsidiary, including multiple dealerships, to BYD.
Learning from Tesla’s troubled experience building its German factory, most Chinese automakers now have heightened risk awareness and are exploring lower-cost entry methods beyond independent factory construction. As more Chinese automakers establish European production, auto parts suppliers are also accelerating localization and favoring partnerships with European firms. Battery giant CATL now operates three European production bases—self-invested facilities in Germany and Hungary, plus a Spanish factory under construction in partnership with Stellantis.
European consumers have mixed reactions: some find Chinese vehicles’ technological features attractive, while others remain cautious or refuse to purchase them, preferring to support the European automotive industry during this sensitive period.
Source: Central News Agency (Taiwan), October 3, 2025
https://www.cna.com.tw/news/acn/202510030203.aspx